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Establishment of Companies in the Province of Mendoza
The Province of Mendoza is located in the Argentine Republic, which is organized as a Federal State with national legislation applicable to all the country as a whole. At the same time the Republic is divided into 23 provinces which dictate some legal regulations and specific procedures.
In this way, there exist leading national legal regulations in relation to commercial, civil, penal, fiscal, corporate and financial matters.
In each province, there are regulatory entities which dictate applicable regulations of local character.
In our country, investments can be carried out individually or through partnerships in their countries of origin. In the latter case, this can be done through a subsidiary, agency or representation, or establishing partnerships in our province. Within this frame, we will start quoting the applicable corporate regulations. At present, the corporate types which are generally in use are the corporations or limited liability companies. In the first case the application is carried out in the administrative ambit, and in the second in the judicial one.
Provincial Law 5,069 (Dec. 26, 1985): The Registry of Corporate Entities was created by this provincial law. Its purpose is to intervene in the constitution, registration, execution, dissolution and liquidation, in the jurisdiction of the province, of the stock companies, civil non-profit associations and foundations which are established in the Province or which, if established in another jurisdiction, exercise their main activity in the Province or establish here subsidiaries, agencies, settlements or any kind of permanent office.- The Registry of Corporate Entities is in charge of all the duties ascribed by the background legislation to the regulating authority. At the same time and in connection to the stock companies, it is responsible for the fulfillment of all the duties ascribed by the background legislation to the registry judges, thus being in charge of arranging the registration, in the Public Trade Registry, of all such companies’ acts and documents whose registration is imposed by the background legislation.
Requirements in corporate matters
If you choose to invest as an agency, subsidiary or representation of the partnership in which you participate in your country, the applicable regulations shall be Section 118 of Law No. 19,550 (text amended in 1984) and Resolution No. 1023/04 of the Registry of Corporate Entities in its Sections 1 and 2.
In this case, the registration of the agency, subsidiary or representation must be carried out in the Registry of Corporate Entities. For this purpose, you must present the following documents:
a.Copy of constitutional act, social by-laws, in the original language.
b.Copy of the resolution of the competent social organism which decided the opening of the subsidiary in Argentina, with offices in the Province of Mendoza, in the original language. In this document the investment must be justified and a legal representative must be appointed.
c.Certificate of Good Standing, issued by competent organism, where the existence of the present corporation and its registry are certified, in the original language.
d.Affidavit of representative/s, administrator/s or person/s in charge, declaring not to have incurred in the prohibitions and incompatibilities foreseen in Section 264 of Law No. 19,550.
e.The mentioned documents must be attested in the country of origin, with the corresponding Apostille in case of countries incorporated to The Hague Convention; or otherwise legalized by the Ministry of Foreign Affairs, International Trade and Worship of the Argentina Republic and, wherever applicable, translated into the national language by a certified translator.
f.Publication of the act in the Official Bulletin of the Province.
g.Payment of the corresponding compensation tax.
If it was decided to make the investment by establishing partnerships in our province, the applicable regulations shall be Section 123 of Law No. 19,550 (text amended in 1984) and Resolution N 1023/04 of the Registry of Corporate Entities in its Sections 3 and 4.
For this purpose, the following documents must be presented:
a.Copy of constitutional act, social by-laws, in the original language.
b.Copy of the resolution of the competent social organism which decided the registration according to Section 123 of Law No. 19,550, and appointment of the legal representative, in the original language. In this case, copy of the granted and registered power in favor of the legal representative.
c.Establishment of the corporation’s and of the legal representatives’ legal domiciles in the jurisdiction of the Province of Mendoza.
d.Certificate of Good Standing, issued by competent organism, in which the existence of the present corporation and its registration are certified, in the original language.
e.The mentioned documents must be attested in the country of origin, with the corresponding Apostille in case of countries incorporated to The Hague Convention; or otherwise legalized by the Ministry of Foreign Affairs, International Trade and Worship of the Argentina Republic and, wherever applicable, translated to the national language by a certified translator.
f.Publication of the act in the Official Bulletin of the Province.
g.Payment of the corresponding compensation tax.
Directors: In compliance with Section 3 of Resolution No. 1696/2004, the absolute majority of the Board of Directors, alternate members included, must have an actual domicile in the country. In the case of directors of foreign nationality, the actual domicile in the country must be qualified by residence certificate issued by competent authority.
The following are some resolutions of the Registry of Corporate Entities which will be of your interest:
Resolution No. 1409/2004: it establishes the requirements to be complied with for the registration of stock companies. For this purpose, the documents to be submitted are:
a)Original document or copy certified by notary public of the first transcript of the public deed which instruments the constitution.
b)Publication in the Official Bulletin for the constitutional act.
c)Attestation of the social capital integration (see Resolution No. 1992/04)
d)Application letter of constitution, certifying payment of service compensation tax.
Resolution No. 1992/2004: It establishes that the money capital contributions made by the share holders of stock companies must be certified before the Registry of Corporate Entities by means of: a) document certified by a banking entity of a fixed term deposit carried out in the Banco Nación Argentina; b) certified document of savings account or current account in the Banco Nación Argentina; both documents in the name of the company’s legal representative or the person duly authorized to carry out such proceedings before the Registry of Corporate Entities.
In all the cases, once the resolution of the Registry of Corporate Entities or of the Court has been obtained, the registration must be carried out (fulfilling all its requirements) in the Public Registry of Corporations.
Resolution No. 814/2006: By means of this regulation, the Registry of Corporate Entities decided on the instrumentation of the URGENT PROCESSING procedure for the registration of national or foreign corporations. In this sense, in a maximum period of 5 working days, it is possible to have the approval resolution which orders the corresponding registration before the Public Registry of Corporations.
If you decide to establish a limited liability company, the registration must be carried out before a Commercial Court, with counsel support.
Tax requirements
The taxes which affect the economic activities in the Argentine Republic can be divided by jurisdictions: national, provincial, municipal.
National Taxes
Income Tax: It is both for corporations (35%) and individuals (scale from 9% to 35%)
Minimum Assumed Income Tax: It levies with 1% the assets that Argentinean companies have in the world for an amount of over $ 200,000.- Its determination can be taken as payment on account of the income tax settled for the same period.
Personal Property Tax: Individuals are required to annually pay this tax of 0.50% to 0.75%, according to the amount of their assets. In the case of individuals not residing in the country, the tax is paid on their assets located in Argentina.
Value Added Tax: This tax is applied to the sales price of the goods and services which are traded. It is also applied to their imports. In the case of exports, they are not reached by the levy, and those who qualify as exporters can request before the A.F.I.P. (Argentine Revenue Service) the refund of the tax paid in their purchases. The general tax rate is 21%, and there are other taxes according to the traded good or service. By way of example, public services are levied with a rate of 27%, and the sale of capital goods, national transport, and interests on foreign and local loans are levied with10.50%.
Tax on Current Account Debits and Credits: This tax reaches the credits and debits carried out in current accounts opened in the financial system with a rate of12/oo.-
Customs system:
a.Import Rights: The import rights are applied with a scale with reaches up to 35%. These rights are complemented with statistic rates of 0.50% and in some cases of 2% on CIF value. Imports are also subject to the payment of VAT (with the general or the differential rate, as corresponds) and with a perception of the income tax of 3%.
b.Export Rights: These go from 5% to 20%, according to the products being dealt with.
Provincial Taxes
Turnover Tax: In Mendoza, the economic activity is reached by the turnover tax with a general rate of 3% on the net price without VAT of the sold goods and services. At the same time, there are differential rates for some activities; for example, that of 1.5% for industrial and primary production. These activities have the benefit of being exempted from the turnover and the stamp taxes, as long as the taxpayers that carry them out comply with certain conditions foreseen in the fiscal regulation.
Stamp Tax: This tax affects the instruments which formalize the economic relationships among the taxpayers; for example, rentals, sales, assignment of real property, hiring of services, etc. The general rate is of 1.50%.
Property Tax: This tax levies real state properties. Here, a series of variables is considered, such as for example: age of building, surface, etc.
Motor Vehicle Tax: This tax levies motor vehicle properties. Here, the following variables are considered: model, vehicle characteristics, etc.
Municipal Taxes
The jurisdictions are 18 departments, and each of them applies its own tax law, determining their rates according to the different services they offer.
Registrations
The registrations must be carried in the following jurisdictions: at national level, before the A.F.I.P (Argentine Revenue Service) and the National Customs Administration, as corresponds; at provincial level, before the Provincial Revenue Office; and at municipal level, before the relevant municipality.
Before the A.F.I.P.: The regulation to comply with basically consists in obtaining a C.U.I.T. (sole tax identification number), by filling in form F.460/J for legal persons, or form F.460/F for individuals; or a CDI (identification number application), by filling in form F.663, so as to be able to carry out any economic activity or procedure in a periodical o permanent way, or to carry out isolated acts.
We will next quote those regulations dictated by the regulatory agencies which, as far as we understand, are important for the present issue: Resolution No. 10.- of the A.F.I.P, which can be consulted in the website www.afip.gov.ar. Considering its more relevant aspects, we can mention the following:
a) For individuals, it is requested the presentation of a copy of the D.N.I (national identity card), or for foreigners who do not have it, of a copy of the CI (identity card) or a certificate which provides evidence that this is being processed before the National Bureau of Migration, where the character of their residence is recorded, and domicile proof issued by the police authority.
b) For directors of corporations not residing in the country who do not have the above indicated documents, it will be requested: the presentation of a copy of the passport and this must be done in the A.F.I.P office where the corporation they manage has its domicile.
c) The regularly established corporations will be required to present a copy of the social by-laws and of the minutes of the Board of Directors where the legal domicile is established.
d) Those corporations in process of creation, apart from the requirements mentioned above, will be requested to present a copy of the Directors’ identity cards, and evidence that the procedure has been started in the Registry of Corporate Entities or Commercial Court. In case the A.F.I.P. forms are presented by attorneys or legal representatives, the presentation of the documents which certify the stated capacity is requested
e) As regards the fiscal and commercial domicile, it will be certified with a copy of the title deed; or of the rental or leasing contract, gratuitous loan, or if this is not the case, a note with affidavit capacity and two tax or service payment receipts which certify the reported domicile.
As regards labor matters, there is a full series of regulations which control work in the Argentine Republic in relation to retirements benefits (state and private), health benefits (through social security companies), work risks (through the Workers’ Compensation Agreement), the Unions, according to the companies’ activities, etc.
Requirements in financial matters
It is required to comply with a series of regulations dictated by the Banco Central de la República Argentina (BCRA), specifically related to foreign currency inflows either due to capital increases of corporations established in the Province, or due to loans obtained abroad. The above mentioned regulations are the A 4554; A 4377; A 4447; A 4359 Communications, which can be consulted in the web page www.bcra.gov.ar
a) In the case that the foreign currency inflows are due to financial loans of over a year term, they are exempted of making the deposit foreseen in Decree 616/05 if they comply with the following conditions: 1) being contracted and cancelled in an average term no shorter than 2 years, including in its calculation capital and interest payment, and 2) being destined to investments in non-financial assets (subsection C of point 2 of the BCRA’s “A” 4377 Communication).- The investor must present, before the intervening banking entity and within 90 running days immediately after the exchange negotiation, the documents which confirm the effective application of the entered funds to the specific exempted destination, or otherwise demonstrate the constitution of the deposit established in point 6 of the “A” 4359 Communication.
b) Also exempted of making the deposit, are the foreign currency inflows which are for direct investment contributions in the country, benefiting from the exemption granted by point 1.a) of the “A” 4447 Communication; for this purpose, it is established that within 190 running days following the start of the registration procedure before the Public Registry of Commerce of the contribution’s definite capitalization, the investor must present before the intervening banking entity, the documents that guarantee such definite capitalization.
When the definite capitalization of the contribution is not put into effect, the exemption falls and there will be up to 10 working days for the constitution of the non-paid deposit established in point 6 of the “A” 4359 Communication. |
